Federal Reserve Proposes Rules for Payment Stablecoins Under the GENIUS Act
Washington, Thursday, 24 September 2026.
The Federal Reserve is seeking public feedback on rules requiring payment stablecoin issuers to back tokens fully with high-quality reserve assets like short-term Treasury bills.
Federal Reserve Initiates Stablecoin Regulatory Framework
On Thursday, 24 September 2026, the Federal Reserve Board officially requested public comment on two proposals designed to establish a regulatory framework for Board-supervised payment stablecoin issuers under the GENIUS Act [1]. The first proposal mandates that issuers fully back stablecoins with permissible reserve assets, such as short-term Treasury bills and high-quality liquid assets, while establishing standardized capital requirements to address credit and operational risks [1]. Additionally, the Board introduced rules for firms safekeeping these assets and clarified the permissibility of stablecoin activities for Board-supervised banks [1]. The comment period for these proposals will close 60 days after publication in the Federal Register, marking a critical window for institutional feedback [1].
Legislative Background and Implementation Timelines
The GENIUS Act, which stands for Guiding and Establishing National Innovation for U.S. Stablecoins, was passed in 2025 and is scheduled for full implementation by 2027 [4]. This legislation grants stablecoin token holders absolute priority over reserve pools during insolvency while expressly denying them FDIC insurance [6]. Concurrently, the Treasury Department issued a proposed rulemaking regarding the GENIUS Act to implement statutory prohibitions on payment stablecoin issuance, with comments due by 19 October 2026 [3]. These timelines indicate a coordinated regulatory push across multiple agencies to finalize frameworks before the 2027 implementation target [3][4].
Banking Sector Response and Reserve Requirements
Banking groups have expressed concerns regarding the pacing of these regulations, with some coalitions requesting extensions to comment periods to properly evaluate proposals alongside OCC frameworks [4]. A key economic distinction lies in reserve composition; the GENIUS Act excludes deposits from the stablecoin definition, meaning reserves primarily consist of U.S. Treasury bills and overnight repos rather than bank deposits [6]. As of September 2026, total stablecoin supply reached approximately $312.0 billion, highlighting the scale of assets potentially affected by these reserve mandates [5]. The Federal Reserve’s proposal aims to mitigate risks where stablecoin supply increases could otherwise reduce U.S. Treasury bill yields or impact liquidity during panics [6].
Global Regulatory Convergence and Market Implications
Internationally, regulatory approaches are converging on the use of overnight reverse repo against sovereign debt, a mechanism authorized by the GENIUS Act [6]. In the European Union, central banks recently requested the removal of requirements for issuers to hold 30% to 60% of reserves in demand deposits, citing liquidity concerns similar to those addressed in the U.S. framework [6]. Unlike tokenized deposits, which may preserve deposit insurance eligibility, stablecoins function as bearer instruments accessible without prior permission, necessitating robust reserve standards [5]. These rules aim to integrate digital assets into the mainstream financial system while maintaining stability in corporate treasury management and cross-border settlements [1].